The DACH Report: An Analysis of Tech and Venture Capital in the German-Speaking World

Speedinvest is a European VC fund with more than 40 investment professionals working from Berlin, London, Munich, Paris, Vienna and San Francisco.

Aber (but): Many of us have roots in Austria, Germany and Switzerland — the DACH region — and we’re extremely interested in the region we call home, at least professionally.

For that reason, we’re especially proud to present the 2019/2020 edition of the “DACH Report — An Analysis of Tech and Venture Capital” in the German-speaking part of the world.

View the full report 👇 or download it HERE. Key takeaways, our DACH market predictions, and corrections are below.

A co-production with our friends at Frontline Ventures, following a venerable tradition established by Mathias Ockenfels back when he was young.

We originally planned to publish earlier this year, but then a pandemic happened. We decided to sit out some of the early shifts in the market and bake them into our report. We’re now in a position to include the most recent facts and data, already taking into account some of the impact the global pandemic has had (or not?) on tech and investment in the region.

Here’s are some of the key takeaways:

• VCs like DACH: Despite the pandemic, from pre-seed to exits, investors are actively seeking to increase exposure to DACH tech and software startups. VC investment in startups has almost doubled to €2.4B ($2.9B) from Q1 to Q3 2020.
• LPs like DACH: The data shows that, during the same period, DACH VCs secured €1.99B ($2.35B) from their investors, a 25% increase from 2019, indicating that appetite has increased. This year also saw four debut funds with first-time managers in the DACH region raise €900M.
• Liquidity in the DACH tech market is also bouncing back with M&A spend in the region already back to pre-pandemic levels in Q4 2020, so far totaling €1.34B ($1.58B) after a €0.08B) ($0.1B) low in Q1 2020.

We also found that:

• Despite the European VC ecosystem maturing, growth capital is dominated by international funds, with growing interest from the US and Asia, while the early-stage landscape is predominantly European and US-based.
• A growing number of DACH VCs count unicorns in the portfolio or have exited companies at + $1 billion valuations.
• DACH countries lead Europe in R&D spending and filed patents with 2.4m patents filed in 2019 across DACH.
• COVID-19 has fueled fragmentation in local ecosystems. Switzerland is the most fragmented with just 27% of tech investment focused in Basel, while Germany is two-times more concentrated, and Austria three-times more focused.
• Switzerland also ranks second in Europe, after the UK, to cumulatively produce the most capital from university spinouts having raised more from spinouts than any other DACH country combined.
  

Ultimately, we’re not surprised that tech investors want more exposure to startups from German-speaking markets during the pandemic. When combined, Austria, Germany and Switzerland’s GDPs are larger than the entire US West Coast, and we lead Europe in R&D, filed patents and tech talent. Founders have all the ingredients in place to build game-changing companies, and that’s exactly what we’ve been seeing across multiple sectors.

Related Reading: Deep dives into the German tech startups and Austrian tech startups in our portfolio

Based on our research, we also venture (pun intended!) predictions that:

• Incubator, pre-seed and seed-stage funds development will accelerate local startup growth in DACH at an unprecedented clip;
• New growth capital from Asia and the US will fuel increased competition for deals;
• COVID-19 will continue to drive fragmentation with an increase of early-stage startups locating outside standard tech hubs;
• DACH R&D will fuel B2B SaaS growth and a new wave of repeat entrepreneurs;
• German regulatory shifts (DVG) will further accelerate a Digital Health boom;
• Seed and Series A valuations will continue to grow in line with European trends as valuations inflate.
  

We hope you’ve found this blog useful. Drop me an email or get in touch on Linkedin if you’d like to share feedback, ideas on how to improve, or you’re interested in receiving funding for your startup.

Also, check out my recent Analysis of 600+ European Digital Health Companies.

Speedinvest is a leading pan-European, early-stage venture capital firm. Our portfolio includes Wefox, Bitpanda, TIER Mobility, GoStudent, Curve, CoachHub, Schüttflix, TourRadar, Adverity, and Twaice. Sign up for our newsletter to get our exclusive content delivered straight to your inbox.